(With Screener) CoffeeCan Basket The buy and forget approach

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The Coffee Can Basket or Coffee Can Portfolio is an investment strategy based on a “buy and forget” approach. This method was popularized by portfolio manager Robert G. Kirby in the 1980s. The idea is to pick high-quality stocks and hold them for a long period, regardless of market fluctuations, without actively managing or trading them frequently. Here’s a breakdown of the concept:

Key Principles:

  1. High-Quality Stocks: The primary focus is on selecting financially strong, well-managed companies with proven track records of growth and stability.
  2. Long-Term Holding: Once the stocks are selected, the investor is encouraged to hold onto them for a decade or longer. The idea is to ignore short-term market noise and allow the power of compounding to work.
  3. Low Turnover: Minimal trading means lower transaction costs, fewer tax liabilities, and more stable portfolio growth over time.
  4. Focus on Fundamentals: Emphasis is placed on companies with a strong competitive edge, excellent corporate governance, and the potential to generate high returns on capital over long periods.

Advantages:

  • Compounding Effect: By holding onto stocks for the long term, investors can benefit from the compounding of returns.
  • Simplicity: It’s a passive strategy requiring little to no active management.
  • Lower Costs: Fewer trades mean reduced transaction costs and capital gains taxes.
  • Emotional Discipline: Investors are less likely to make irrational decisions based on short-term market volatility.

Building a Coffee Can Portfolio:

  1. Stock Selection Criteria:
  • Consistent Revenue & Profit Growth: Companies with at least 10-15 years of steady revenue and profit growth.
  • Return on Capital Employed (ROCE): Look for companies with a high and consistent ROCE, typically above 15%.
  • Low Debt: Financially strong companies with manageable or zero debt.
  • Strong Leadership & Governance: Management that has a solid track record of creating shareholder value.
  1. Diversification:
  • While diversification is not the main focus of this strategy, it’s wise to ensure a mix of industries to avoid over-concentration in one sector.

Screener Link - CoffeeCan Basket The buy and forget approach - Screener

(May be you can use scanx by dhan for finding coffeecan stocks)

(Please If you have any ideas Comment below)

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